You guys ever think about how common it is for a forum thread about the homeless, the bottom 0.1%, to devolve into a discussion about the super rich, the top 0.1%? It's basically a travesty.
Once you learn about the budgets for homeless programs, I hope you realize discussions of taxation of the top 0.1% is irrelevant. Homeless programs for large cities is on order low tens of millions. That's 10m, 20m, 30m per big city. In Houston, which has driven its homeless population in half over the past decade, its homeless program is about 15m to 20m per year out of a 3b budget. A lot of it was federal grants too. It is something on order 0.5% of Houston's annual budget. Whatever solutions that arises has no material impact on the super rich.
So, it's really not a question of money per se, but more of willingness to do something by the government, and proper management of the programs. Having the right solutions is really important as there is a lot of hokum about what the right thing to do is. Structurally, as costs of living and costs of having a home/rent outrace incomes, there will be an increase in homeless beyond some floor of people who are homeless not because they can't afford a home. You see this in all economically prosperous cities with rapid increases in property values. City governments should know this, be prepared for it, and have solutions.
It really should be unacceptable for mayors, councils, governors to see homelessness increasing and do nothing.
I feel like this is a really great opportunity for Apple to use its endless wealth to truly help their neighborhood. If Apple does absolutely nothing, scorns the homeless, and forces them away, they would have a massive PR problem. This is honestly kind of a marketing gift. Spend a chunk of change (which is pennies to Apple), do something magical with that Apple swirl on top, and poof. You demonstrate all your values, put your money where your mouth is, AND directly help the lives of the people in your own back yard. It’s a win/win and would cost them nothing.
I don't understand why a commercial company should step up to fix the government's neglect?
For the last 20-40 years the U.S. government has been more concerned about helping the the top 1% rather than the bottom 1%.
But, what are they to do?
Aiding those who are already homeless is like filling a bottomless pit.
It takes resolving the societal issues that caused them to be homeless. But generally we either don't know what those issues are or are in denial over them.
One big cause, for instance, is the closure of state mental institutions and "freeing those inmates" -- many of whom ended up living under a bridge. Should we reopen those institutions? The one by me was self contained and self sustaining and used to house 4,000 patients and it supplied them with jobs in the greenhouse, farm, bakery, butcher shop, etc...
That institution was originally opened in the early 19th century to house what we today call "homeless" but morphed into being strictly a long tern care mental hospital -- caring for those who could not care for themselves. It served a purpose. But few would argue in favor of reopening it. So, now we complain about the "homeless problem".
It's like if there's an emergency on an airline and the oxygen mask drops downs. What did the flight attendant tell you to do? Put on your mask first, before helping your child or others put on theirs. Why, because you would be unless to them if you passed out first.
Well, the 1% now pays about 40% of the Fed income taxes collected. Even thought they only earn 20% of the total income. In 1960, the top 1% paid 13% of the total tax collected while earning 9% of the total income. Even though in the 1960s the top marginal tax rate was higher. The government needs for the 1% to earn more, it's the most efficient way of generating tax revenue. The government depends on the tax revenue from top 1% to help the bottom 50%. And this is just Federal income tax and don't include any State income taxes.
Some seems to think that the top marginal tax rate should be high enough, so to punish the rich for making what they consider, too much money. That is not the case, the top marginal tax rate (all marginal tax rate for that matter) is set to maximize tax revenue in each bracket. It is based on the Laffer curve. if the marginal tax rate is set too low or too high, the government will lose tax revenue. What is the benefit of taxing the 1% at 60% and collecting less in tax revenue, that is needed to help the bottom 50%. Besides making you feel better about it?
Plus many seem to think that to be in the top 1% one need to have an annual income of way over $1M a year and are living like Bezo, Gates, Zuckerberg and the others in the .01%. That is not the case, in the US all it takes is an annual income of about $750,000 (or $515,000 AGI) to be in the 1%. The average annual income off the 1% is about $1.7M. but that is heavy skewed upward by the top .01%. The Bezo, Gates, Zuckerberg, Musk, Buffet, etc.. If one were to exclude the income of the top .01%, from the 1%, the average income of the 1% would drop considerably.
And for tax purpose, annual income should be the only way to determine the tax rate. No way should anyone be taxed based on the wealth, that have already been taxed or will be taxed in the future. A person earning $100K a year with $1M in an IRA should pay the same tax rate on that $100K, as a person earning $100K a year with $10K in an IRA. The current value of my stock portfolio or the value of my mortgage fee home, should not be used to determine the marginal tax rate of my annual income.
You claim that the 1% only earns 20% of income, but pays 40% of taxes collected makes no sense, of course. If that were the entire formula, then the top 1% would be losing wealth as they paid out double their fair share in taxes. Yet somehow, wealth continually becomes more concentrated at that top end.
This is, of course, because much of their income isn’t from what’s counted as earned, taxable income. So they siphon off money that’s not taxed, and then of course as you say insist that the hoarded wealth not be taxed, either.
The flight attendant instructs you to put your mask on first before helping others. There is still an expectation that you then help the others, not inhale deeply while you shrug and claim there’s no more oxygen to go around.
The fact that you don't even understand that one do not pay out 100% of what they earn in taxes, shows you have very little understanding on how taxes work. You can't be that mathematically challenged to not understand that the total income earned by the 1% and percent of the total taxes they paid, are calculated from two difference sources. The percent of total taxes they pay accounts for ALL income taxes collected, from every tax payer. In other words, 99% of all the taxpayers, pays 60% of the total taxes revenue collected by the IRS. The 1% pays there other 40%.
If you are so sure that the 1% are evading taxes, why don't you report them to the IRS. I'm sure they would like to know what you know. You would want to do your part to make sure the 1% are doing their part to help the bottom 50% ... right. The IRS don't lose tax evasion cases too often.
High-income households provide an outsized share of all philanthropic giving. Those in the top 1 percent of the income distribution (any family making $394,000 or more in 2015) provide about a third of all charitable dollars given in the U.S. When it comes to bequests, the rich are even more important: the wealthiest 1.4 percent of Americans are responsible for 86 percent of the charitable donations made at death, according to one study.
You don’t have to evade taxes illegally when you can rent politicians to pass tax laws to help you avoid them.
Well, the 1% are not getting their moneys worth. They are still paying 40% of all the Fed income taxes collected, while only earning 20% of the total income. Maybe you can show then how its done. They are worst off than in the 60's, when they were earning 9% of the total income while paying just 13% of the total taxes.
In 1960 GDP of the USA was $3.23t, so 9% of that is about $290b going to the 1% In 2020 GDP of the USA was $18.79t, so 20% of that is about $3.76t going to the 1%
A 1200% nominal increase, inflation adjusted (compared to a 500% increase in GDP). Even with an increased tax burden, I'd be very surprised if they're collectively worse off.
GDP is not the total earned income that is taxable by the IRS. The total income is all the reported income from all of the tax returns (for the year).
In 1960, the total income was about $316M and total income taxes the IRS collected on that was $40M. Which meant the 1% earned $28M (9% of $316M) and paid $5.2M (13% of $40M) in taxes.
In 2018 the total income was about $11.6T and the total income taxes the IRS collect on that was $1.5T. Which meant the 1% earned 2.4T (20% of $11.5T) and paid $.6T (40% of $1.5T) in taxes.
(This chart gives you a better idea on how this is all calculated, as it includes all the percentile, not just the 1%)
In 1960, the 1% paid an average tax rate of 18.5%. Even though the top marginal tax bracket was 91%. In 2018, the 1% paid an average effective tax rate of 25.4%.
The 1% consist of 1.4M "households" not individuals. The 1% are the top 1% of tax returns based on reported income. A "household" could consist of 2 individuals filing a joint return. So the top 1.4M tax returns, out of 140M returns, were responsible for paying 40% of the taxes, in 2018.
Ok, but where's the conclusion that they're worse off? Unless you inflation adjust it and compare the take home, I don't see how you can begin to conclude that. The percentages of income themselves don't mean much when there is so much more income being earned.
Zoom all the way out to the big picture for clarity. In 1989, the top 1% owned 23.4% of the wealth in the US and the bottom 50% had 3.7%. That's a significant disparity already, right? By this year, the top 1% now own 32.1% of all the wealth in the US and the bottom 50% have dropped to 2%. The rich are richer and the poor are poorer, full stop. The rest is obfuscation and distraction. Labor productivity in the US has grown for that entire period (and for decades before). So as the US economy grows and US workers continually become more productive, somehow their share of the pie from all that work has gone down.
How can that be? Income growth at the top has skyrocketed; for everybody else, not so much. Since the 80s, we keep hearing about this "trickle down" bullsh*t (see the oxygen mask analogy offered up-thread), that cutting taxes for the "job creators" will benefit the folks at the bottom, because the job creators are going to use that windfall to create great jobs. Instead, they spend money on politicians assuring they're not taxed on significant portions of their income, that they're not prevented from transferring wealth uphill through predatory practices in the finance and other industries, and that those at the very bottom, earning minimum wage, don't see anything like the wage growth the folks at the top have. As those folks at the top have seen their incomes increase by double digits in recent years, the federal minimum wage has increased by 0.0% in the last decade. Adjusted for inflation, minimum wage is actually worth $1.90 per hour less than it was the last time minimum wage was raised in 2009. So when someone starts tossing around figures to claim the top 1% are so much more burdened now, it's a bunch of fluff. Those folks are not hurting. The people who work full time and still can't afford a place to live? They're not doing so well.
The simple answer is this, the growth in labor productivity and economic growth over the decades, is reflected most in the stock market. The 1% owns about 40% of the stock markets wealth and it accounts for over 34% of their total wealth. This is why the .1 percent accounts for about half of the wealth of the 1% or about 15%.
Bezo is worth $200B (even after his divorce) That's because the value of AMZN has been on a tear lately. Bezo drew a $100K salary when he was CEO of Amazon. All the AMZN stocks he owns were the stocks he got when AMZN IPOed. He has never gotten any more shares issued to him when CEO of Amazon, as part of a pay package or incentive reward. His wealth just increased in value over the years as the price of AMZN shares kept going up. But he only has to pay income tax on his salary and the profit from the AMZN shares he sold.
This is how it is with most of the 1%, their wealth increase because the value of their stocks increases. Bezo, Gates, Musk, Ellison, Buffet, Zuckerberg, Page, Brin, Waltons, etc., immense wealth comes from the stocks they own in their own company. Thus the percent of the total wealth the 1% own, increases just by the fact that the value of their stocks increases. The bottom 50% own very little stocks, thus do not have an equal sharing of the wealth produced by increase labor productivity and economic growth over the decades. They benefit primarily from the US economy not being in a depression or recession and low unemployment and low inflation.
All this is nothing new. There has always been the Rockefellers, Carnegies, Vanderbuilts, Gettys, Waltons, etc.., that skews the percent of wealth the 1% owns.
Plus wealth naturally flows to the top 1% as that's where people that keeps accumulating wealth will end up. When some one that was in the bottom 50% because they were working in a fast food diner while attending college, ends up with a high paying job after graduating and move up to middle class, they did not leave any wealth behind. Then over the years, when they accumulate enough wealth to be in the 1%, they take all their wealth with them. The middle class is the most mobile in that there is a high churn rate from people moving up to the 1% and moving down back to the bottom 50%. When they move down, they didn't take much wealth with them. Unlike when they move up. If the middle class that are on brink of being in the 1% obtains more wealth, they end up in the 1% and thus all their wealth is no longer counted in the middle class but in the 1%.
BTW- income is not wealth. You are muddying up the picture by referencing wealth in one picture and income in the other. Income is how much one report to the IRS and is taxed every year. Wealth are the assets one have and accumulated over the years, (minus debt and liability). One do not need to have a high income to own a lot of wealth. Specially if one inherits their wealth or lucky enough to invest in the right stocks. To be in the 1% in regards to income, one need to have an annual income of about $750K. To be in the 1% in regards to wealth, one needs to have about $11M in assets (minus debt and liability). Though there is a large overlap, each have a different criteria in order to be in it. One do not pay annual income tax on wealth. (At least not yet.) And wealth should not be used as a way to increase the tax on annual income.
About 40% of the annual income reported by the 1% are from long term capital gains. Only 35% of their income falls under ordinary income that can be taxed at the highest marginal rate. Long term capital gains rate has not changed since Clinton lowered it from 28% to 20% in 1997, with the Taxpayer Relief Act of 1997. Bush lowered it to 15% for the middle class on income less than $450K to stimulate the economy after 9/11. Obama chose to extend it when Bush reduction expired, as we were in a recession (housing bubble). Trump left it unchanged.
This is why the raising or lowering of the marginal tax rate on the 1%, do not have much of affect on the taxes collected. It's the capital gains that matter more. Which is why POTUS Biden if going after raising captain gains tax on the rich. But if the capital gains tax is too high, the rich will just hold on to their stock and wait. Which will increase their wealth as the market goes up. It's not like they need the money. Which is why politician like Sen. Warren wants to tax wealth.
But you watch, if POTUS Biden manages to raise the capital gains tax for the rich, there will be a flood of tax revenue coming from capital gains, before the rate goes up. And then the revenue from capital gains will drop when the rate kicks in, as more people will hold on to their stocks longer or they already sold most of them, before the tax went up.
Regardless, now the 1% only accounts for 20% of the annual total income collected by the IRS but pays 40% of the total income tax revenue collected.
I feel like this is a really great opportunity for Apple to use its endless wealth to truly help their neighborhood. If Apple does absolutely nothing, scorns the homeless, and forces them away, they would have a massive PR problem. This is honestly kind of a marketing gift. Spend a chunk of change (which is pennies to Apple), do something magical with that Apple swirl on top, and poof. You demonstrate all your values, put your money where your mouth is, AND directly help the lives of the people in your own back yard. It’s a win/win and would cost them nothing.
I don't understand why a commercial company should step up to fix the government's neglect?
For the last 20-40 years the U.S. government has been more concerned about helping the the top 1% rather than the bottom 1%.
But, what are they to do?
Aiding those who are already homeless is like filling a bottomless pit.
It takes resolving the societal issues that caused them to be homeless. But generally we either don't know what those issues are or are in denial over them.
One big cause, for instance, is the closure of state mental institutions and "freeing those inmates" -- many of whom ended up living under a bridge. Should we reopen those institutions? The one by me was self contained and self sustaining and used to house 4,000 patients and it supplied them with jobs in the greenhouse, farm, bakery, butcher shop, etc...
That institution was originally opened in the early 19th century to house what we today call "homeless" but morphed into being strictly a long tern care mental hospital -- caring for those who could not care for themselves. It served a purpose. But few would argue in favor of reopening it. So, now we complain about the "homeless problem".
It's like if there's an emergency on an airline and the oxygen mask drops downs. What did the flight attendant tell you to do? Put on your mask first, before helping your child or others put on theirs. Why, because you would be unless to them if you passed out first.
Well, the 1% now pays about 40% of the Fed income taxes collected. Even thought they only earn 20% of the total income. In 1960, the top 1% paid 13% of the total tax collected while earning 9% of the total income. Even though in the 1960s the top marginal tax rate was higher. The government needs for the 1% to earn more, it's the most efficient way of generating tax revenue. The government depends on the tax revenue from top 1% to help the bottom 50%. And this is just Federal income tax and don't include any State income taxes.
Some seems to think that the top marginal tax rate should be high enough, so to punish the rich for making what they consider, too much money. That is not the case, the top marginal tax rate (all marginal tax rate for that matter) is set to maximize tax revenue in each bracket. It is based on the Laffer curve. if the marginal tax rate is set too low or too high, the government will lose tax revenue. What is the benefit of taxing the 1% at 60% and collecting less in tax revenue, that is needed to help the bottom 50%. Besides making you feel better about it?
Plus many seem to think that to be in the top 1% one need to have an annual income of way over $1M a year and are living like Bezo, Gates, Zuckerberg and the others in the .01%. That is not the case, in the US all it takes is an annual income of about $750,000 (or $515,000 AGI) to be in the 1%. The average annual income off the 1% is about $1.7M. but that is heavy skewed upward by the top .01%. The Bezo, Gates, Zuckerberg, Musk, Buffet, etc.. If one were to exclude the income of the top .01%, from the 1%, the average income of the 1% would drop considerably.
And for tax purpose, annual income should be the only way to determine the tax rate. No way should anyone be taxed based on the wealth, that have already been taxed or will be taxed in the future. A person earning $100K a year with $1M in an IRA should pay the same tax rate on that $100K, as a person earning $100K a year with $10K in an IRA. The current value of my stock portfolio or the value of my mortgage fee home, should not be used to determine the marginal tax rate of my annual income.
You claim that the 1% only earns 20% of income, but pays 40% of taxes collected makes no sense, of course. If that were the entire formula, then the top 1% would be losing wealth as they paid out double their fair share in taxes. Yet somehow, wealth continually becomes more concentrated at that top end.
This is, of course, because much of their income isn’t from what’s counted as earned, taxable income. So they siphon off money that’s not taxed, and then of course as you say insist that the hoarded wealth not be taxed, either.
The flight attendant instructs you to put your mask on first before helping others. There is still an expectation that you then help the others, not inhale deeply while you shrug and claim there’s no more oxygen to go around.
The fact that you don't even understand that one do not pay out 100% of what they earn in taxes, shows you have very little understanding on how taxes work. You can't be that mathematically challenged to not understand that the total income earned by the 1% and percent of the total taxes they paid, are calculated from two difference sources. The percent of total taxes they pay accounts for ALL income taxes collected, from every tax payer. In other words, 99% of all the taxpayers, pays 60% of the total taxes revenue collected by the IRS. The 1% pays there other 40%.
If you are so sure that the 1% are evading taxes, why don't you report them to the IRS. I'm sure they would like to know what you know. You would want to do your part to make sure the 1% are doing their part to help the bottom 50% ... right. The IRS don't lose tax evasion cases too often.
High-income households provide an outsized share of all philanthropic giving. Those in the top 1 percent of the income distribution (any family making $394,000 or more in 2015) provide about a third of all charitable dollars given in the U.S. When it comes to bequests, the rich are even more important: the wealthiest 1.4 percent of Americans are responsible for 86 percent of the charitable donations made at death, according to one study.
You don’t have to evade taxes illegally when you can rent politicians to pass tax laws to help you avoid them.
Well, the 1% are not getting their moneys worth. They are still paying 40% of all the Fed income taxes collected, while only earning 20% of the total income. Maybe you can show then how its done. They are worst off than in the 60's, when they were earning 9% of the total income while paying just 13% of the total taxes.
In 1960 GDP of the USA was $3.23t, so 9% of that is about $290b going to the 1% In 2020 GDP of the USA was $18.79t, so 20% of that is about $3.76t going to the 1%
A 1200% nominal increase, inflation adjusted (compared to a 500% increase in GDP). Even with an increased tax burden, I'd be very surprised if they're collectively worse off.
GDP is not the total earned income that is taxable by the IRS. The total income is all the reported income from all of the tax returns (for the year).
In 1960, the total income was about $316M and total income taxes the IRS collected on that was $40M. Which meant the 1% earned $28M (9% of $316M) and paid $5.2M (13% of $40M) in taxes.
In 2018 the total income was about $11.6T and the total income taxes the IRS collect on that was $1.5T. Which meant the 1% earned 2.4T (20% of $11.5T) and paid $.6T (40% of $1.5T) in taxes.
(This chart gives you a better idea on how this is all calculated, as it includes all the percentile, not just the 1%)
In 1960, the 1% paid an average tax rate of 18.5%. Even though the top marginal tax bracket was 91%. In 2018, the 1% paid an average effective tax rate of 25.4%.
The 1% consist of 1.4M "households" not individuals. The 1% are the top 1% of tax returns based on reported income. A "household" could consist of 2 individuals filing a joint return. So the top 1.4M tax returns, out of 140M returns, were responsible for paying 40% of the taxes, in 2018.
Ok, but where's the conclusion that they're worse off? Unless you inflation adjust it and compare the take home, I don't see how you can begin to conclude that. The percentages of income themselves don't mean much when there is so much more income being earned.
Zoom all the way out to the big picture for clarity. In 1989, the top 1% owned 23.4% of the wealth in the US and the bottom 50% had 3.7%. That's a significant disparity already, right? By this year, the top 1% now own 32.1% of all the wealth in the US and the bottom 50% have dropped to 2%. The rich are richer and the poor are poorer, full stop. The rest is obfuscation and distraction. Labor productivity in the US has grown for that entire period (and for decades before). So as the US economy grows and US workers continually become more productive, somehow their share of the pie from all that work has gone down.
How can that be? Income growth at the top has skyrocketed; for everybody else, not so much. Since the 80s, we keep hearing about this "trickle down" bullsh*t (see the oxygen mask analogy offered up-thread), that cutting taxes for the "job creators" will benefit the folks at the bottom, because the job creators are going to use that windfall to create great jobs. Instead, they spend money on politicians assuring they're not taxed on significant portions of their income, that they're not prevented from transferring wealth uphill through predatory practices in the finance and other industries, and that those at the very bottom, earning minimum wage, don't see anything like the wage growth the folks at the top have. As those folks at the top have seen their incomes increase by double digits in recent years, the federal minimum wage has increased by 0.0% in the last decade. Adjusted for inflation, minimum wage is actually worth $1.90 per hour less than it was the last time minimum wage was raised in 2009. So when someone starts tossing around figures to claim the top 1% are so much more burdened now, it's a bunch of fluff. Those folks are not hurting. The people who work full time and still can't afford a place to live? They're not doing so well.
The simple answer is this, the growth in labor productivity and economic growth over the decades, is reflected most in the stock market. The 1% owns about 40% of the stock markets wealth and it accounts for over 34% of their total wealth. This is why the .1 percent accounts for about half of the wealth of the 1% or about 15%.
Bezo is worth $200B (even after his divorce) That's because the value of AMZN has been on a tear lately. Bezo drew a $100K salary when he was CEO of Amazon. All the AMZN stocks he owns were the stocks he got when AMZN IPOed. He has never gotten any more shares issued to him when CEO of Amazon, as part of a pay package or incentive reward. His wealth just increased in value over the years as the price of AMZN shares kept going up. But he only has to pay income tax on his salary and the profit from the AMZN shares he sold.
This is how it is with most of the 1%, their wealth increase because the value of their stocks increases. Bezo, Gates, Musk, Ellison, Buffet, Zuckerberg, Page, Brin, Waltons, etc., immense wealth comes from the stocks they own in their own company. Thus the percent of the total wealth the 1% own, increases just by the fact that the value of their stocks increases. The bottom 50% own very little stocks, thus do not have an equal sharing of the wealth produced by increase labor productivity and economic growth over the decades. They benefit primarily from the US economy not being in a depression or recession and low unemployment and low inflation.
All this is nothing new. There has always been the Rockefellers, Carnegies, Vanderbuilts, Gettys, Waltons, etc.., that skews the percent of wealth the 1% owns.
Plus wealth naturally flows to the top 1% as that's where people that keeps accumulating wealth will end up. When some one that was in the bottom 50% because they were working in a fast food diner while attending college, ends up with a high paying job after graduating and move up to middle class, they did not leave any wealth behind. Then over the years, when they accumulate enough wealth to be in the 1%, they take all their wealth with them. The middle class is the most mobile in that there is a high churn rate from people moving up to the 1% and moving down back to the bottom 50%. When they move down, they didn't take much wealth with them. Unlike when they move up. If the middle class that are on brink of being in the 1% obtains more wealth, they end up in the 1% and thus all their wealth is no longer counted in the middle class but in the 1%.
BTW- income is not wealth. You are muddying up the picture by referencing wealth in one picture and income in the other. Income is how much one report to the IRS and is taxed every year. Wealth are the assets one have and accumulated over the years, (minus debt and liability). One do not need to have a high income to own a lot of wealth. Specially if one inherits their wealth or lucky enough to invest in the right stocks. To be in the 1% in regards to income, one need to have an annual income of about $750K. To be in the 1% in regards to wealth, one needs to have about $11M in assets (minus debt and liability). Though there is a large overlap, each have a different criteria in order to be in it. One do not pay annual income tax on wealth. (At least not yet.) And wealth should not be used as a way to increase the tax on annual income.
About 40% of the annual income reported by the 1% are from long term capital gains. Only 35% of their income falls under ordinary income that can be taxed at the highest marginal rate. Long term capital gains rate has not changed since Clinton lowered it from 28% to 20% in 1997, with the Taxpayer Relief Act of 1997. Bush lowered it to 15% for the middle class on income less than $450K to stimulate the economy after 9/11. Obama chose to extend it when Bush reduction expired, as we were in a recession (housing bubble). Trump left it unchanged.
This is why the raising or lowering of the marginal tax rate on the 1%, do not have much of affect on the taxes collected. It's the capital gains that matter more. Which is why POTUS Biden if going after raising captain gains tax on the rich. But if the capital gains tax is too high, the rich will just hold on to their stock and wait. Which will increase their wealth as the market goes up. It's not like they need the money. Which is why politician like Sen. Warren wants to tax wealth.
But you watch, if POTUS Biden manages to raise the capital gains tax for the rich, there will be a flood of tax revenue coming from capital gains, before the rate goes up. And then the revenue from capital gains will drop when the rate kicks in, as more people will hold on to their stocks longer or they already sold most of them, before the tax went up.
Regardless, now the 1% only accounts for 20% of the annual total income collected by the IRS but pays 40% of the total income tax revenue collected.
A good analysis. I would though, take issue with two points:
You say: "The simple answer is this, the growth in labor productivity and economic
growth over the decades, is reflected most in the stock market. "
While that is what drove the stock market in past decades and remains the base theory for many, this decade the PE ratio of the S&P has tripled and it's price has nearly quadrupled, but that was not due to any fundamental factors like productivity -- but to the Fed flooding the market with liquidity and then pushing people into it.
And: "One do[es] not pay annual income tax on wealth. (At least not yet.) And
wealth should not be used as a way to increase the tax on annual income."
Indirectly there is: the middle class was pushed into 401Ks and now those years of savings are inflated by a ballooning stock market. making for an enormous wealth pool. But the government forces them sell those stocks with its RMD (Requited Minimum Distribution) and, not only do they have to pay taxes on the stocks they sell, but typically they end up in taxable income producing investments.
You guys ever think about how common it is for a forum thread about the homeless, the bottom 0.1%, to devolve into a discussion about the super rich, the top 0.1%? It's basically a travesty.
Once you learn about the budgets for homeless programs, I hope you realize discussions of taxation of the top 0.1% is irrelevant. Homeless programs for large cities is on order low tens of millions. That's 10m, 20m, 30m per big city. In Houston, which has driven its homeless population in half over the past decade, its homeless program is about 15m to 20m per year out of a 3b budget. A lot of it was federal grants too. It is something on order 0.5% of Houston's annual budget. Whatever solutions that arises has no material impact on the super rich.
So, it's really not a question of money per se, but more of willingness to do something by the government, and proper management of the programs. Having the right solutions is really important as there is a lot of hokum about what the right thing to do is. Structurally, as costs of living and costs of having a home/rent outrace incomes, there will be an increase in homeless beyond some floor of people who are homeless not because they can't afford a home. You see this in all economically prosperous cities with rapid increases in property values. City governments should know this, be prepared for it, and have solutions.
It really should be unacceptable for mayors, councils, governors to see homelessness increasing and do nothing.
As I pointed out upthread, homelessness doesn't have a single cause, but the biggest causes are things that would be far less expensive to fix upstream, as opposed to accepting that it's just going to be, and then looking sternly at municipalities as they struggle to deal with the problems wrought by everyone else externalizing their costs and responsibilities. Cities can't effectively fix wage issues, or create mental health and addiction treatment hospitals and programs. Those programs and policies need to be addressed much more broadly, long before they manifest in the form of people having nowhere to live.
You guys ever think about how common it is for a forum thread about the homeless, the bottom 0.1%, to devolve into a discussion about the super rich, the top 0.1%? It's basically a travesty.
Once you learn about the budgets for homeless programs, I hope you realize discussions of taxation of the top 0.1% is irrelevant. Homeless programs for large cities is on order low tens of millions. That's 10m, 20m, 30m per big city. In Houston, which has driven its homeless population in half over the past decade, its homeless program is about 15m to 20m per year out of a 3b budget. A lot of it was federal grants too. It is something on order 0.5% of Houston's annual budget. Whatever solutions that arises has no material impact on the super rich.
So, it's really not a question of money per se, but more of willingness to do something by the government, and proper management of the programs. Having the right solutions is really important as there is a lot of hokum about what the right thing to do is. Structurally, as costs of living and costs of having a home/rent outrace incomes, there will be an increase in homeless beyond some floor of people who are homeless not because they can't afford a home. You see this in all economically prosperous cities with rapid increases in property values. City governments should know this, be prepared for it, and have solutions.
It really should be unacceptable for mayors, councils, governors to see homelessness increasing and do nothing.
As I pointed out upthread, homelessness doesn't have a single cause, but the biggest causes are things that would be far less expensive to fix upstream, as opposed to accepting that it's just going to be, and then looking sternly at municipalities as they struggle to deal with the problems wrought by everyone else externalizing their costs and responsibilities. Cities can't effectively fix wage issues, or create mental health and addiction treatment hospitals and programs. Those programs and policies need to be addressed much more broadly, long before they manifest in the form of people having nowhere to live.
True! Although local authorities get stuck with it.
My first job out of nursing school was working on an ACT team caring for those living in the community with "severe and persistant mental illness" (mostly schizophrenia and bipolar with some Borderline thrown in)... It was a multidisciplinary team of nurses, social workers, therapists and a psychiatrist funded by the county.
The county funded it because otherwise these people ended up in the hospital -- and it was cheaper to pay us to keep them out of the hospital than it was to pay the the hospitals $1,000+ a day ....
And yes, a big part of our job was keeping them housed and off the street. It was not an easy task. But a very fulfilling one -- those people may have been crazy, but they were good people.
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Once you learn about the budgets for homeless programs, I hope you realize discussions of taxation of the top 0.1% is irrelevant. Homeless programs for large cities is on order low tens of millions. That's 10m, 20m, 30m per big city. In Houston, which has driven its homeless population in half over the past decade, its homeless program is about 15m to 20m per year out of a 3b budget. A lot of it was federal grants too. It is something on order 0.5% of Houston's annual budget. Whatever solutions that arises has no material impact on the super rich.
So, it's really not a question of money per se, but more of willingness to do something by the government, and proper management of the programs. Having the right solutions is really important as there is a lot of hokum about what the right thing to do is. Structurally, as costs of living and costs of having a home/rent outrace incomes, there will be an increase in homeless beyond some floor of people who are homeless not because they can't afford a home. You see this in all economically prosperous cities with rapid increases in property values. City governments should know this, be prepared for it, and have solutions.
It really should be unacceptable for mayors, councils, governors to see homelessness increasing and do nothing.
The simple answer is this, the growth in labor productivity and economic growth over the decades, is reflected most in the stock market. The 1% owns about 40% of the stock markets wealth and it accounts for over 34% of their total wealth. This is why the .1 percent accounts for about half of the wealth of the 1% or about 15%.
https://www.heritage.org/taxes/commentary/1-chart-how-much-the-rich-pay-taxes ;
https://www.politifact.com/factchecks/2019/jan/31/elizabeth-warren/warren-top-01-own-about-much-bottom-90/
Bezo is worth $200B (even after his divorce) That's because the value of AMZN has been on a tear lately. Bezo drew a $100K salary when he was CEO of Amazon. All the AMZN stocks he owns were the stocks he got when AMZN IPOed. He has never gotten any more shares issued to him when CEO of Amazon, as part of a pay package or incentive reward. His wealth just increased in value over the years as the price of AMZN shares kept going up. But he only has to pay income tax on his salary and the profit from the AMZN shares he sold.
This is how it is with most of the 1%, their wealth increase because the value of their stocks increases. Bezo, Gates, Musk, Ellison, Buffet, Zuckerberg, Page, Brin, Waltons, etc., immense wealth comes from the stocks they own in their own company. Thus the percent of the total wealth the 1% own, increases just by the fact that the value of their stocks increases. The bottom 50% own very little stocks, thus do not have an equal sharing of the wealth produced by increase labor productivity and economic growth over the decades. They benefit primarily from the US economy not being in a depression or recession and low unemployment and low inflation.
All this is nothing new. There has always been the Rockefellers, Carnegies, Vanderbuilts, Gettys, Waltons, etc.., that skews the percent of wealth the 1% owns.
Plus wealth naturally flows to the top 1% as that's where people that keeps accumulating wealth will end up. When some one that was in the bottom 50% because they were working in a fast food diner while attending college, ends up with a high paying job after graduating and move up to middle class, they did not leave any wealth behind. Then over the years, when they accumulate enough wealth to be in the 1%, they take all their wealth with them. The middle class is the most mobile in that there is a high churn rate from people moving up to the 1% and moving down back to the bottom 50%. When they move down, they didn't take much wealth with them. Unlike when they move up. If the middle class that are on brink of being in the 1% obtains more wealth, they end up in the 1% and thus all their wealth is no longer counted in the middle class but in the 1%.
BTW- income is not wealth. You are muddying up the picture by referencing wealth in one picture and income in the other. Income is how much one report to the IRS and is taxed every year. Wealth are the assets one have and accumulated over the years, (minus debt and liability). One do not need to have a high income to own a lot of wealth. Specially if one inherits their wealth or lucky enough to invest in the right stocks. To be in the 1% in regards to income, one need to have an annual income of about $750K. To be in the 1% in regards to wealth, one needs to have about $11M in assets (minus debt and liability). Though there is a large overlap, each have a different criteria in order to be in it. One do not pay annual income tax on wealth. (At least not yet.) And wealth should not be used as a way to increase the tax on annual income.
About 40% of the annual income reported by the 1% are from long term capital gains. Only 35% of their income falls under ordinary income that can be taxed at the highest marginal rate. Long term capital gains rate has not changed since Clinton lowered it from 28% to 20% in 1997, with the Taxpayer Relief Act of 1997. Bush lowered it to 15% for the middle class on income less than $450K to stimulate the economy after 9/11. Obama chose to extend it when Bush reduction expired, as we were in a recession (housing bubble). Trump left it unchanged.
This is why the raising or lowering of the marginal tax rate on the 1%, do not have much of affect on the taxes collected. It's the capital gains that matter more. Which is why POTUS Biden if going after raising captain gains tax on the rich. But if the capital gains tax is too high, the rich will just hold on to their stock and wait. Which will increase their wealth as the market goes up. It's not like they need the money. Which is why politician like Sen. Warren wants to tax wealth.
But you watch, if POTUS Biden manages to raise the capital gains tax for the rich, there will be a flood of tax revenue coming from capital gains, before the rate goes up. And then the revenue from capital gains will drop when the rate kicks in, as more people will hold on to their stocks longer or they already sold most of them, before the tax went up.
Regardless, now the 1% only accounts for 20% of the annual total income collected by the IRS but pays 40% of the total income tax revenue collected.
A good analysis. I would though, take issue with two points:
"The simple answer is this, the growth in labor productivity and economic growth over the decades, is reflected most in the stock market. "
"One do[es] not pay annual income tax on wealth. (At least not yet.) And wealth should not be used as a way to increase the tax on annual income."